401(k) Dividends and Cost Basis

ReinvDiv is the correct transaction, as it *should* affect your cost basis. After all, the additional shares you've received cost you the value of whatever the dividend would have been had you received it in cash. In fact, as someone here mentioned recently regarding another investment transaction, you really should consider this a 2-step process. (You had it right when you specifically stated : "When dividendds [sic] are paid and re-invested".) 1. You are paid the dividend. 2. The proceeds are immediately used to aquire more shares.

Regarding the Gain/Loss Percentages - I don't use the ROR much, so will leave that aspect for someone who knows more about it to address.

vcard

Thanks for the reply. You are correct that I am getting hung up on the return aspect of this. For instance, I put in $100 throughout the year and the shares are now worth $110. However, the fund pays out $5.00 and re-invests the proceeds for me, my return for the year now shows 4.5% instead of 10%.

vcard wrote:

You "put in" $105, not $100. You could have had them send you a check for the $5, instead you chose to buy more shares with it. That's no different than if the fund paid no dividend at all, but you sent them a $5 check to buy shares.

True, except in a 401(k) you don't have the choice of getting that $5 check, it is automatically deducted.

I guess what I am looking for is a way to see how much I have actually put in vs. what the account is worth today.

I understand the reason a dividend and re-invest increases the cost-basis, I am just not getting the data I need. At the end of a year, I have put in a certain amount regardless of dividends paid and re-invested.

Maybe there is a report I could run to get the information I need.

Thanks.

John Pollard wrote:

I don't recall you mentioning what version of Quicken you are using. In Q2005 and Q2006, on the Portfolio tab of the Investing Center there is a menu option "Glossary". I suggest you look in the Glossary (or your version's equivalent) for the Quicken definition of the various terms involving "returns", "gain/loss", etc.: there are quite a few. (And I believe some include a distinction for amount "invested").

I believe there is a great deal of misunderstanding about what the terms mean and how their values should be interpreted.

"Maybe there is a report I could run to get the information I need"

In Quicken 2005 Deluxe you can run an "Investment Performance" report which will show only the cash contibutions and not the reinvested dividends in your account. It also figures the average annual return for you.

Thank you very much. It was a definition problem. The columns I needed to add were "Amount Invested" (which I did not even know existed) and "ROI %).

These numbers give me exactly what I am looking for.

Thanks again!

It sounds like you are looking for return on investment (ROI) instead of gain/loss. ROI should be available columns if you customize the portfolio view. That's from Q2005 deluxe, at least -- not sure about other versions.

You are correct. I went out to the Portfolio view and added "Amount Invested" and "ROI%" and those are the exact numbers I was looking for.

Thanks.